none Accounting: [Operating leverage] PinkCorporation has sales of 1,350 units at$55 per unit. Variable expenses are 44%of the selling price. If total fixedexpensesare $23,000, the degree of operatingleverage is?

Explanation of Contribution Margin:The contribution margin is the amount remaining from sales…

Answered: Accounting: [Operating leverage] Pink…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 23MC: If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month,...

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What is the degree of operating leverage?
Operating Leverage Snellville Co. reports the following data: Sales Variable costs Contribution margin Fixed costs $897,700 (610,400) $287,300 (227,400) $59,900 Operating income Determine Snellville Co.'s operating leverage. Round your answer to one decimal place. Previous A Nex
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CVP; operating leverage; income statementRacine Tire Co. manufactures tires for all-terrain vehicles. The tires sell for $60, and variable cost per tire is $30; monthly fixed cost is $450,000.a. What is the break-even point in units and sales dollars?Break-even point in units: Break-even in sales dollars: b. If Ronnie Rice, the company’s CEO, wants the business to earn a pre-tax profit of 25 percent of revenues, how many tires must be sold each month? c. If the company is currently selling 20,000 tires monthly, what is the degree of operating leverage? d. 1. If the company can increase sales volume by 15 percent above the current level, what will be the increase in net income? What will be the new net income?New net income $ Increase in net income $ 2. Prove your calculations with an income statement.Note: Do not use negatives signs with your answers.
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Operating leverage Asha Inc. and Samir Inc. have the following operating data: Sales Variable costs Contribution margin Fixed costs Asha Inc. Asha Inc. Samir Inc. $265,500 (106,500) $159,000 (106,000) $53,000 $ $ Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 10% ? If required, round answers to nearest whole number. Dollars Percentage $781,000 (468,600) $312,400 (170,400) $142,000 c. The difference in the contribution margin than are Samir Inc.'s. % % of operating income is due to the difference in the operating leverages. Asha Inc.'s operating leverage means that its fixed costs are a percentage of
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Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Вeck Inc. 2$ % Bryant Inc. % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.

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Accounting: [Operating leverage] Pink Corporation has sales of 1,350 units at $55 per unit. Variable expenses are 44% of the selling price. If total fixed expenses are $23,000, the degree of operating leverage is?